The engine was developed for and targeted at eighth-generation hardware and DirectX 11-compatible platforms, such as Xbox One, the PlayStation 4, and versions of Microsoft Windows.

In early 2018, the development team of Final Fantasy XV was established by Square Enix as a new subsidiary studio dubbed Luminous Productions.

This was a difficult period for Square Enix: the project then known as Final Fantasy Versus XIII was hitting technical barriers as it transitioned to open-world environments its original Crystal Tools engine could not handle, and Final Fantasy XIV had met with a disastrous launch due to development and technical problems.

Faced with these issues, Square Enix decided to bring in former developers from Sega to create new engines for their products, including Luminous Studio.

[3][4] The construction of Luminous was similar in concept to Epic Games' Unreal Engine or the Unity engine from Unity Technologies in that it incorporated all the development tools needed from asset editing onward, as well as being "high quality, easy to use, flexible, high speed, compact, and supporting both manual and automatic [game development methods]".

[5] There were many major factors that the team considered while building the engine, as they wanted to ensure the highest possible quality for high-end games.

[5] The head of the project was Yoshihisa Hashimoto, Square Enix's Chief Technology Officer, who had moved over to the company from Sonic Team in 2009 and became involved with development in 2011.

[4][7] Other key Square Enix staff members working on Luminous Studio include Takeshi Nozue, Akira Iwata and Hiroshi Iwasaki.

The demo was a collaboration between the cinematic Visual Works division—a section of the company generally associated with CGI movie production for the company's video games—and Square Enix's R&D department, Advanced Technology Division, with a goal to create a real-time graphics tech demo that has a quality coming as close as possible to pre-rendered CGI.

As part of the presentation, guest speakers paused the demo and adjusted elements of the characters on the fly to show off the engine's customization features.

[12] There is a scene where 100,000 illuminated firefly-like insects appear on screen, each one a full polygon mesh model with body and wings, which proceed to merge to generate a summoned monster.

While seventh-generation games used 50 to 100 MB of texture data for a scene, Final Fantasy XV can use about sixteen times this amount on the PlayStation 4 console.

It also portrays human crying with a high level of detail, and the quality of the real-time graphics have been compared to pre-rendered CGI animation.

[20] In October 2016, Square Enix registered for the trademark "Luminous Studio Pro" before the release of Final Fantasy XV.

[40] IGN cited the technology as a "hurdling leap into the future", and other reviews emphasised realistic 3D modeling of the human eye and real time rendering of graphics.